Venture capital Flashcards by JOPAUL SANJUAN

plays a crucial role in supporting and funding innovative startups and high-growth potential projects.

Venture capital

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involves providing financial resources, expertise, and guidance to early-stage companies in exchange for equity.

Venture capital

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private equity investment that focuses on providing capital and support to early-stage companies with high growth potential.

Venture capital

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known as venture capitalists,

investors

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Plays a crucial role in fostering innovation, driving economic growth, and creating job opportunities.

Venture Capital

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It provides the necessary funding for startups to develop and launch their products or services, scale their operations, and reach new market.

Venture Capital

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form of investment that involves capital provided by investors to fund various stages of a company’s development:

Private Equity

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stages of a company’s development:

startup and early-stage funding
mature company buyouts
restructuring.

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private equity investments is to

generate strong returns

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refers to the sequence of stages and activities involved in funding and nurturing early-stage companies with high growth potential.

venture capital cycle

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play a central role in this cycle, providing funding, expertise, and guidance to startups.

Venture capital (VC) firms

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Stages of the Venture Capital Cycle:
VC firms identify potential investment opportunities through various channels such as networking events, referrals, pitch competitions, and industry research.

deal sourcing

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Stages of the Venture Capital Cycle:
In this stage, VC firms conduct thorough research and analysis to evaluate the startup’s business model, market potential, team, and financials.

Due Diligence

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Stages of the Venture Capital Cycle:If the startup passes due diligence, the VC firm provides funding in exchange for equity ownership, usually through rounds of financing (e.g., seed, Series A, Series B).

Investment

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Stages of the Venture Capital Cycle:
firms actively contribute expertise, industry connections, and mentorship to help the startup scale and succeed.
e. Exit: This stage involves realizing returns on the investme

Value Addition

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This stage involves realizing returns on the investment. Common exit strategies include Initial Public Offerings (IPOs) or acquisition by larger companies.

Exit

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Key Players in the Venture Capital Process: Founders seeking funding for their startups.

Entrepreneurs

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Key Players in the Venture Capital Process:
Professionals managing VC funds and making investment decisions.

Venture Capitalists

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Key Players in the Venture Capital Process: Institutional and individual investors who provide capital to VC firms.

Limited Partners (LPs):

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Key Players in the Venture Capital Process: Individuals who invest their personal funds in startups at an early stage.

Angel Investors

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Key Players in the Venture Capital Process: Experienced professionals who offer guidance and support to startups.

Advisors and Mentors

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Key Players in the Venture Capital Process: Investment banks, underwriters, or acquirers involved in the exit process.

Exit Partners

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Dynamics and Challenges: VC investments carry high risks but offer the potential for substantial returns.

Risk and Return

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Dynamics and Challenges: Thorough due diligence is essential to mitigate risks and ensure successful investments.

Due Diligence Complexity

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Dynamics and Challenges: Balancing the interests of entrepreneurs, VCs, and other stakeholders throughout the cycle.

Alignment of Interests

Dynamics and Challenges Timing exits strategically to maximize returns while considering market conditions.

Exit Timing

Dynamics and Challenges: Managing a diverse portfolio of startups to spread risk.

Portfolio Management:

refers to the difference between the funding required by a business, particularly early-stage startups or small enterprises, and the available capital from traditional financing sources, such as bank loans or personal savings.

Capital Gap

Factors Contributing to Capital Gap:

high-risk nature of early-stage ventures, the absence of sufficient collateral to secure loans, difficulties accessing potential markets or customers.

Types of Capital Gaps Startups and newly established businesses often face challenges in securing initial funding for their operations. Traditional lenders and risk-averse investors may hesitate to support unproven concepts.

Early-Stage Capital Gap

Types of Capital Gaps As businesses progress beyond their initial stages and seek funds to scale their operations, they might encounter a growth-stage capital gap. The need for larger amounts of capital to expand

Growth-Stage Capital Gap

Types of Capital Gaps Companies engaged in research and development activities may struggle to secure funding for innovation initiatives, hindering their ability to develop new products or technologies.

Innovation and Research Capital Gap

Causes of Capital Gap Early-stage ventures are often associated with higher risks due to uncertain market acceptance and unproven business models.

Risk Perceptions

Causes of Capital Gap require collateral to secure loans.

Lack of Collateral

Causes of Capital Gap in niche markets or industries with limited access to customers

Market Barriers

Consequences of the Capital Gap can impede a business's growth prospects.

Stunted Growth

Consequences of the Capital Gap can hinder a company's ability to innovate

Innovation Roadblocks

Consequences of the Capital Gap companies may struggle to cover operational costs or adapt to changing market conditions.

Survival Challenges

Mitigating the Capital Gap: angel investment, venture capital, crowdfunding, or grants from government agencies or private foundations.

Alternative Funding Sources

Mitigating the Capital Gap: providing grants, subsidies, or low-interest loans to startups and small businesses.

Government Initiatives

Mitigating the Capital Gap: bootstrapping (self-funding), lean operations, and strategic partnerships

Business Strategies

Overview of the Philippine VC and PE Landscape involves financing early-stage startups

Venture Capital

focuses on mature companies seeking expansion or restructuring

Private Equity Industry

Key Players and Investment Focus Major VC and PE Firms:

Foxmont Capital Partners Ayala Corporation ADB Ventures Gobi Partners ICCP Venture Partners First Asia Venture Capital Quest Ventures JGDEV Digital Equity Ventures

Key Players and Investment Focus Investment Sectors: Sectors that attract significant VC and PE investments:

Fintech E-commerce Food and Beverage Healthtech

Philippine Business Challenges lack sufficient awareness and understanding of venture capital (VC) and private equity (PE)

Awareness and Understanding

Philippine Business Challenges The education system may not

Educational Gaps

Philippine Business Challenges In some cases, risk aversion

Cultural Factors

Philippine Business Challenges absence of prominent success stories

Lack of Success Stories

Philippine Business Challenges guide entrepreneurs

Lack of Intermediaries

Challenges Faced by the Industry Foreign Investment Regulations and Legal Complexities

Regulatory Hurdles

Challenges Faced by the Industry Certain industries in the Philippines have restrictions on foreign ownership, limiting the participation of foreign investors in crucial sectors.

Ownership Restrictions

Challenges Faced by the Industry Lengthy and complex bureaucratic processes for obtaining necessary permits and approvals can discourage foreign investors and slow down investment activities.

Bureaucratic Processes

Challenges Faced by the Industry Ambiguities or inconsistencies in laws and regulations related to foreign investment can create confusion and deter investors who seek clarity and stability.

Ambiguities in Laws

Challenges Faced by the Industry Foreign exchange controls and restrictions on repatriation of funds can impact the ease with which investors can exit their investments.

Currency Controls

Challenges Faced by the Industry Availability of High-Quality Investment Opportunities

Deal Flow

Challenges Faced by the Industry The Philippines' startup ecosystem is still developing, and there might be a shortage of startups that have reached the stage where they are attractive investment opportunities.

Early-Stage Ecosystem

Challenges Faced by the Industry Investors heavily rely on networks and relationships to discover potential investments. Limited access to such networks can restrict the flow of promising deals.

Access to Networks

Challenges Faced by the Industry Investors might perceive the Philippines as a higher-risk market compared to more established startup hubs, leading to a cautious approach and fewer investments

Risk Perception

Challenges Faced by the Industry The startup landscape might be fragmented, with startups spread across different regions and sectors, making it harder for investors to identify opportunities.

Fragmentation

Government Initiatives and Policies Encouraging VC and PE Activities

Government Support

Government Initiatives and Policies The government may offer tax incentives, grants, and subsidies to both local and foreign investors who support startups and businesses in strategic sectors. These incentives can help attract investment and stimulate growth in the VC and PE ecosystem.

Incentives and Grants

Government Initiatives and Policies The government often initiates programs to support startups and entrepreneurs. These programs can include funding opportunities, mentorship, and access to resources that help startups become investment-ready.

Startup Programs

Government Initiatives and Policies Collaborations between the government, industry associations, and financial institutions can lead to the creation of funds specifically focused on VC and PE investments. These funds can provide crucial capital to startups and early-stage businesses.

Industry Collaboration

Government Initiatives and Policies Influence on VC and PE Industry Growth

Policy Impact

Government Initiatives and Policies

Foreign Investment Regulations

Government Initiatives and Policies Influence on VC and PE Industry Growth

Policy Impact

Government Initiatives and Policies Government policies that emphasize and incentivize innovation, research, and technology development can encourage the growth of startups and businesses in sectors that are attractive to VC and PE investors.

Innovation and Technology Focus

Government Initiatives and Policies Favorable policies that improve the ease of doing business, reduce bureaucratic hurdles, and streamline administrative processes can enhance the overall investment climate and attract more investors to the country.

Ease of Doing Business

Government Initiatives and Policies Robust legal frameworks that protect investors' rights and provide mechanisms for dispute resolution contribute to a more secure and attractive investment environment for both local and foreign investors.

Investor Protection

Government Initiatives and Policies Policies that promote entrepreneurship education and awareness of alternative financing methods can increase the pool of investment-ready startups and entrepreneurs in the country.

Educational Initiatives